- Allen Czermak
The Global Supply Chain Reset Is Here
The world is witnessing atrocities by one power hungry individual in the country of Ukraine and it looks like nothing will stop him. Already over 2000 civilians have been killed and that’s not including security forces like police and first responders. There is little that Westerners can do besides donating money and arms to the people of Ukraine. The battle will be fierce but with God's help the good people will triumph and the Russian tyrant will be ousted.
At the same time the global supply chain is undergoing a major reset and this can possibly be the solution for ending this logistical nightmare. Western countries have been relying on the East for its low-cost oil and inexpensive manufacturing produced by overworked and underpaid laborers. This will come to an end as Western countries will take their business elsewhere and become economically independent from countries like Russia and China. True, the cost of goods will increase but it’s the only way we can get out of this supply chain mess because companies have become too greedy to move away from Eastern manufacturing plants. Popular brands that want to participate in the global economy are going to have to negate Russian business for now along with all those who support them. Countries like Belarus are already feeling the economic impact of being allied with Russia. As for China, they will show their support for Russia and begin to be isolated from the Western economies. President Trump has said that it’s only a matter of time before China invades Taiwan and they are presently watching how the world reacts to the current invasion of Ukraine. This is bound to create even more havoc on the global supply chain as Russia and China will be excommunicated from the world economy. This will cause a total reset of the supply chain of the United States and its allies as they will be forced to create a new supply chain network that is reliable and affordable. Part of sustainability means that business owners can actually afford importing their products in a timely fashion. Until then we will experience product shortages and higher prices.
What Will a Global Supply Chain Reset Look Like?
The United States has already seen during the COVID-19 pandemic how supply chains can be wrecked by being dependent on other countries for medical supplies and goods. Empty store shelves, clogged water ports, and costs of shipping containers from Asia are skyrocketing without any relief in sight. All the signs of a supply chain petering out have been exposed and the invasion of Ukraine has only amplified it. Western countries are pretty much cutting off any economic ties with Russia and those who support them.
Once our local economies have had the shackles of being dependent on the East removed our supply chains will be more sustainable. Bottlenecks at water ports will begin to ease as manufacturing will begin to be done locally. Try and imagine buying a car, bicycle, or major appliance that’s manufactured right here in the USA. Brands will have to get innovative on how to bring the costs of manufacturing a product down in order to remain competitive. Democrats will be forced to open the Keystone XL Pipeline once gas prices exceed over $5 per a gallon. If they choose not to become energy independent they will likely be in for a bloodbath during the 2022 midterm elections. The point here is that the United States and its Western allies will be forced to get used to a world economy without the participation of Russia and China. The only ones who will lose here are the good people of China and Russia that are just looking to get through their daily lives and make a decent living. Their economies will tumble and it will take decades to repair. That’s unfortunate for these people as they will get taxed while the Russian and Chinese oligarchs live flamboyant lifestyles.
Can Our Trucking Industry Handle An Independent Economy?
One of the four key economic principles is supply and demand. As the demand for a product or service increases, its price will begin to surge. As the demand continues to rise others will look to get a piece of the pie and deliver the same product or service at a lower price. This is referred to as competition. Competing in a healthy economy provides the opportunity for all to prosper.
The same would apply to the logistics industry. If there is a demand for more trucking the principle of demand will answer calls and naturally there will be more trucks available for transport. But what if there are not enough truck drivers? Then these companies will have to become innovative with their logistics and understand that there are other modes of transporting goods via ship and rail. Freight liners that participate in this mode of logistics are referred to as intermodal transportation companies. Using a trusted logistics provider can save you money by using multiple modes of transport to keep the shipping container moving until it reaches its final destination. What increases the cost of transporting a container into and throughout the United States are the many drayage fees that are incurred while it sits idle at a water port or transfer station. Having a good logistics partner can avoid such fees, lowering the cost of having a container shipped to your warehouse.
How Will The Eurasian Continent Be Impacted Economically?
Supply chain in this region of the world will become very complex as it will need to first migrate its energy to countries with the same political alliance. That means importing oil via ship rather than a pipeline coming from Russia and getting products manufactured in countries other than China. This is a turning point for the European Union as they now are forced to take sides instead of being passive and controlled by countries with Communistic ideologies. This will mean paying more for oil in the short-term from countries like Saudi Arabia, United States, and Canada.
Similar to how the European Union will need to wean itself off of Russian crude oil, countries that are part of the North Atlantic Treaty Organization (NATO) will also have to follow suit along with maximizing other sources of energy. As per manufacturing products in regions other than China, this will be quite a challenge for all as it is still by far the cheapest country to mass-produce goods. The only way we can begin to manufacture outside of China is for Western countries to begin to implement friendlier policies that will extract companies to come and produce their products there. One such example is Tesla. The company has officially moved its headquarters from Silicon Valley to Texas, which is more friendly for producing their electric vehicles. The same thing will begin to happen in Eurasia, those countries that are more financially friendly towards big corporations will host their manufacturing and countries with less lucrative policies will be on the outside looking in. This is all about economics and the countries of the European Union and NATO need to make their economies thrive without countries like Russia and China.
The Winners & Losers
To put things mildly, no one is a winner when there are mass casualties and millions of refugees throughout Europe coming in from a war battered country like Ukraine. Westerners have no clue why Russia felt the need to invade Ukraine in such a criminal way and it will take many years to repair what's been done. It’s bad enough that the world has been through a pandemic that has savaged the global economies and now the Eurasian continent has to deal with war. Those who seek good and hate evil will need to show acts of kindness to one another and work on self improvement in order to make the world a better place.
Russia - Loser
Vladimir Putin will continue to hide in a bunker and become more isolated until he loses power. But the people of Russia will suffer the most as the Russian ruble continues to plunge. Just to put things in perspective, $1 USD is currently worth ₽107.42 RUB. They may have conquered the country of Ukraine but it will not be accepted by the global economy. With that being said Russia will be forced to release the territory back to Ukraine and the country will reclaim independence. Putin and his henchmen will be tried for war crimes and a new political party will take over Russia.
Ukraine - Loser
It will take years to repair the damage that was done from the war and if President Volodymyr Oleksandrovych Zelenskyy survives it will take many years for him to bring the country to economic stability. As for the people of Ukraine, it's ruinous that they had friends and family perish and their lives disrupted. They will never fully heal from what they had to go through.
Western Countries - Winner
In the short term these countries, including the United States will go through years of political struggle until economic independence from Russia & China is sustained which may seem like a loss but will ultimately turn into a victory. The countries in the west have had their supply chain disrupted by the COVID-19 pandemic and now they are forced to go elsewhere for their energy and manufacturing. Countries that are inviting major corporations will thrive and those who are not due to policy will be forced to pay the price of higher energy cost and expensive imports.
China - Winner
According to Trading Economics, China's GDP will grow to 15600.00 USD billion this past year and is the second largest economy in the world just behind the United States. China will be able to sustain itself and will weigh if it’s worth it to invade neighboring countries on the outcome of the war in Ukraine. If the world looks away and continues to purchase oil from Russia it will most likely follow suit but they are not going to sacrifice economic prosperity for a small country like Taiwan. The only question is how will China’s economy be impacted if Western allies take their business elsewhere?
What has happened in Ukraine is a crime and Vladimir Putin will be punished. If not with a physical imprisonment it will be an economical imprisonment. What is ironic about this whole thing is that a supply chain reset would have never happened under President Trump as he would have stood up to Putin’s bluff. Only with a weak leader like President Biden, Putin was comfortable enough to invade Ukraine and now Russia has been ostracized from the global economy. It’s quite unfortunate that it had to happen this way but Western allies were too greedy for too long. Now they have to face the truth and gain economic independence.
We hope and pray for the people of Ukraine and no nation should raise a sword against one another and world peace should come speedily in our days.